Quarterly report pursuant to Section 13 or 15(d)

RELATED PARTY TRANSACTIONS

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RELATED PARTY TRANSACTIONS
9 Months Ended
Sep. 30, 2021
Related Party Transactions [Abstract]  
Related Party Transactions Disclosure [Text Block]

NOTE 4: RELATED PARTY TRANSACTIONS

 

Wages and bonus payable to related parties

 

Accruals for salary and bonuses to officers and directors are included in accrued liabilities in the balance sheets and totaled $4,259,662 and $3,726,943 as of September 30, 2021 and December 31, 2020, respectively. As part of the separation agreement with Mr. Ponce de Leon, the Company agreed to pay him all his accrued salary within two years but agreed to pay him $200,000 by November 2015 out of revenues earned. As the Company did not earn revenue in 2015 and as of September 30, 2021 has still not earned revenue, the obligation to Mr. Ponce de Leon of $1,766,463 is currently in default and the amount includes $539,749 in accrued interest. It is the Company’s intention to pay Mr. Ponce de Leon immediately upon receiving revenue.

 

Convertible Debt

 

During the nine months ended September 30, 2021, the Company issued three convertible notes totaling $18,600. The convertible notes are secured by Company assets and the common stock of the Company, bear interest at 12% per annum, are convertible into shares of the Company’s common stock at $0.06 per share and are due three years from the dates of issuance.

 

As of September 30, 2021 and December 31, 2020, the Company had outstanding short-term convertible notes payable to an entity controlled by a majority shareholder of $9,669,168 and $8,950,325, net of unamortized discounts of $97,893 and $486,867, respectively and outstanding long-term convertible notes payable of $104,120 and $332,776, net of unamortized discounts of $3,543 and $86,167, respectively. The convertible notes are secured by assets and the common stock of the Company, bear interest at 12% per annum, are convertible into shares of the Company’s common stock at $0.06 per share and are due three years from the dates of issuance. Amortization expense related to debt discounts on convertible debt for the nine months ended September 30, 2021 and 2020 was $470,765 and $1,262,910, respectively.

 

Nonconvertible Debt

 

During the nine months ended September 30, 2021, the Company borrowed a total of $471,550 from an entity controlled and owned by a significant shareholder of the Company (“Related Party Note Holder”). Additionally, during September 2021, the Related Party Note Holder purchased a third-party convertible note and accrued interest for $115,000, replacing it with a new, non-convertible note. The notes are unsecured, due on demand and accrued interest at 12% per annum. As of September 30, 2021, the balance on the notes was $586,550 and the Company incurred $28,284 in accrued but unpaid interest expense.

 

As of September 30, 2021 and December 31, 2020, the Company had outstanding notes payable of $705,000 and $705,000, respectively, to an individual that is a significant shareholder.

 

As of September 30, 2021 and December 31, 2020, the Company had outstanding advances payable to an officer of the Company of $83,170 and $83,150, respectively. The advances payable are unsecured, bear no interest and are due on demand.